Main featured image: Dolce & Gabbana’s debut NFT collection which sold for approximately $5.7 million dollars in October 2021.

So, what are NFTs?

NFTs or “non-fungible tokens” are baffling people everywhere. Even seasoned tech experts have trouble explaining the enigmatic fintech topic in layman’s terms, so God help this features contributor, because she’s about to break it down for you using sources she trusts and understands. In other words, Vogue and social media.  

For Vogue India, co-founder of Milan tech company Bigthinx, Chandralika Hazarika had this simple analogy. The opposite of a non-fungible token, is a fungible token. An example of fungible token is – a dollar. “Currency is a prime example because a dollar is always a dollar, not more nor less. And like currency, notes can change hands, one dollar can be traded for another one dollar note of equal value.”

But, non-fungible tokens are the exact opposite – they are one-of-a-kind, and can’t be swapped for something else of equal value. The value of an NFT can change depending on volatile factors, such as perceived worth and market events. According to fashion technology website, The Interline: “NFTs are Non-Fungible Tokens; non-fungible refers to one of a kind, a unique digital asset. More than just a run-of-the-mill crypto coin, NFTs are digital files created as jpg, png, .mov or 3D fashion files before being minted (attached) to a blockchain….and they function as valuable items traded within the digital space.”

Reddit on NFTs

I generally find Reddit to be a mine of information on a wide range of topics, so I had a look at what the open forum had to say. As a regular user of Reddit and someone who finds themself often in a state of confusion, I highly recommend the Explain Like I’m Five subreddit. There, I can crowdsource well-referenced answers worded in basic language, kindly supplied for free by total strangers.

One explanation for NFTs provided to the page by a commenter named “u/grandpaisland” says, “It is essentially buying a ‘certificate of authenticity’ for a thing, usually a piece of digital media. But it doesn’t actually get you The Thing as anyone can also save and have the thing. You’re the only one who has that ‘certificate’ (not actually a certificate) but since everyone can still copy The Thing itself and have it at the same level of quality it’s pretty useless. Manufactured exclusivity.”

I am not sure that if I really was five years old, that I could understand that summary, but at 27 I can confidently, pretty much, grasp it. Thanks, grandpaisland!

How is the fashion world reacting to NFTs?

If the NFT world is all about collectibles and owning something unique or rare that increases in value because of that rarity, it makes sense that the fashion world, something which thrives on exclusivity, collecting, and ownership and investing in goods that hold or increase in value over time, would be forerunners in this new realm. But according to Vogue Business, in an article from May 2021, fashion brands were finding it difficult to make any large impact with NFTs: “Any brand or person can “mint” an NFT, which has led to a flood of NFTs for sale, and often brands lack familiarity with the crypto audience that form the core base of NFT buyers, experts say. And NFT sellers often don’t understand just how small the NFT buyer base is: blockchain analytics company Covalent found that fewer than 2,000 buyers accounted for 80 per cent of total purchase volume on Rarible, the second-largest NFT exchange. Even widely known celebrities are struggling to sell NFTs: only one of supermodel Kate Moss’s NFTs has sold, while another remains unbid on.”

Digital fashion companies RTFKT and Overpriced.™ are two that are leading the pack on NFT transactions in fashion, though both also offer the option for physical reproductions of certain NFTs, also called “wearable NFTs”. As reported by The Interline, luxury brands like Gucci are among the first in the fashion world to test the waters of this new field: “The high-end brand released an exclusive drop, a digital version of Gucci’s Dionysus bag. Sold on Roblox Corp.’s platform for about $4,115, the bag was worth more than the price of the physical item. In addition, other luxury brands like Burberry and Louis Vuitton have collaborated with Blankos Block Party (Burberry) and Beeple creations (Louis Vuitton) to drop NFTs connected to video games.”

DressX is a platform that caters for our tendency to the performative on social media by offering users the option to buy a clothing piece in NFT form, upload a picture of themselves, and have the image altered to show them wearing their new NFT purchase so that they can share it on social media. Could this be the answer to some environmental issues around over-production, excess waste, polluting practices and depletion of natural resources that the fashion industry is battling? Having this access to the new without ever having to buy a physical product could be the breakthrough environmentalists and climate change activists have been waiting for, but time will tell if the world is ready to look good only in the Metaverse and digital world, and it’s clear that NFTs come with their own sustainability issues too due to the huge amounts of electricity needed to create and maintain them.

Why are Some NFTs Worth Millions?

So, we may have answered the ‘What are NFTs’ question, but why are some NFTs worth millions? As it’s possible to tokenise pretty much any kind of media to sell as an NFT, there are a lot of NFTs being generated for modest sums of money – but recent headlines of multi-million-dollar sales are striking. International auction house Christie hosted a sale of an NFT by digital artist Beeple for $69m (£50m) , setting a new record for digital art. French firm Sorare, which sells football trading cards in the form of NFTs, has raised $680m (£498m). The reason for these high prices are the volatile factors deciding its worth (the perceived value and market events described earlier). Plus, NFTs can contain smart contracts that can give the artist, for example, a cut of any future sale of the token. 

Why Are NFTs Bad?

In terms of moral principles, there are some straightforward valid arguments against NFTs. One is the cost of energy and carbon footprint associated with the process of maintaining the blockchain. For an NFT to exist, it has to be certified by a public certificate of authenticity or proof of ownership contained on a digital ledger, and this process sucks up a lot of energy. Also, NFTs can be used in art scams, and exist in a murky, unregulated sphere which makes folks uneasy, for obvious reasons. 

NFTs in the Art World

In the world of art, too, there are objections to “NFT art”, for not being art at all, and for working against standards of artistic aesthetic. Troublingly, bona fide artists are creating NFTs, but not doing so for the sake of contributing to an artistic canon – just to turn a profit. And because the whole raison d’etre of an NFT is to make money, many say that its artistic potential is not only limited but even regressive. Last month, Sean Ono Lennon controversially promoted a series of Boring Ape NFTs, which look like bad posters at a dodgy piercing shop. The ape skulls featured in the NFTs are “hand drawn”, garish and mean essentially nothing. Some of these NFTs are valued at $300,000.

One does start to realise that if bad art goes for these kinds of figures, the imagination required to generate it is never challenged. As put by Dan Brooks for Gawker Media, “… NFT art combines the nuanced social awareness of computer programmers with the soulful whimsy of hedge fund managers. It is art for people whose imaginations have been absolutely captured by a new kind of money you can do on the computer.”

Still got questions? Email us on digital@thegloss.ie and we’d be happy to explore the topic further.